The Daily Dow FOOL GLOBAL WIRE by Robert Sheard LEXINGTON, KY. (Apr. 7, 1997) -- Adding money to a stock portfolio over time is perhaps the single most important strategy anyone can follow to build wealth gradually. Combining it with the Dow Approach, of course, is just plain Foolish. A strategy which only allows for trades once a year, though, presents some unique problems when one wishes to add new money. Unlike a mutual fund, you can't easily just send in a check and pick up some more shares without paying more commissions. And if you add money regularly, once a month, let's say, the commissions can add up rapidly, even at deep-discount brokers. What are the options, then? Let's look at a few popular ones: The basic and only moderately productive option is simply to stick your additional money (and received dividends) in your brokerage cash account until your next annual update. You'll only get money-market interest during the year, but it's easy to do. Dividend Reinvestment Plans allow you to buy shares directly from a company, thus bypassing the brokerage fees. But it's not the easiest approach. The drawback to them with the Dow Approach is that they aren't very flexible; you can only buy and sell on the company's pre-set dates. If you're only holding the stock for a year, setting up a new batch of DRiPs each year can ruin the simplicity of this 15-minutes-and-done approach each year. For DRiP details, though, check out Chuck Carlson's books in FoolMart. Running more than one Dow portfolio, staggered with different starting dates, can give you several entry points each year to add new money. The advantages for this approach are a little more diversification and the opportunity to add money regularly. The disadvantages are that you'll pay more in commissions to maintain several portfolios and you also must keep close track of your purchase dates. If you have the same stock in more than one of these portfolios, you must instruct your broker which shares to sell in order to maintain the long-term holding status on all your shares. Another option is to park your additional cash and dividends in an index fund during the year while you wait for your annual portfolio update. This has the advantages of being fairly easy, low-cost, and at least allows your new money to keep pace with the market while you wait for your annual update. My favorite approach is a little more aggressive, and allows the best of both worlds: consistently good returns and simplicity. I buy a certain percentage on margin at the beginning of the year and let my regular deposits pay down the margin amount. At 7%-9% interest (depending on your broker), the interest you pay on the margin loan is well below the historical average return for the strategy (20%+). Also, the deposits you intend to make during the year are working for you even before you make them. It saves on commissions (you can stick with a single update per year), yet you're able to add as much money as often as you want and still have it working for you ahead of time. As long as you don't get carried away with margin (I think a third on margin is the most I'd personally consider rather than the 50% the Fed currently allows), this can boost your returns even within a fairly conservative equity strategy. If you use margin, though, make sure you do some homework and understand all the ramifications of margin requirements at your broker. Investing on margin can be a terrific tool, but leverage can work against you in down times or if you abuse it. Fool on. (c) Copyright 1997, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool. ________________________________

The Current BTD 10 AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:T)") else Response.Write("(NYSE:T)") end if %> *Intl. Paper <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:IP)") else Response.Write("(NYSE:IP)") end if %> *General Motors <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:GM)") else Response.Write("(NYSE:GM)") end if %> *Chevron <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:CHV)") else Response.Write("(NYSE:CHV)") end if %> *Eastman Kodak <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:EK)") else Response.Write("(NYSE:EK)") end if %> Minnesota Mining <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:MMM)") else Response.Write("(NYSE:MMM)") end if %> J.P. Morgan <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:JPM)") else Response.Write("(NYSE:JPM)") end if %> DuPont <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DD)") else Response.Write("(NYSE: DD)") end if %> Exxon <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:XON)") else Response.Write("(NYSE:XON)") end if %> Philip Morris <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:MO)") else Response.Write("(NYSE:MO)") end if %> NOTE: Foolish four stocks are listed in italics and preceded by an asterisk. Updated Daily

1997 Foolish Four Model Stock Change Last -------------------- T + 7/8 34.75 GM --- 54.00 CHV --- 65.00 MMM -1 1/8 82.13 Day Month Year FOOL-4 +0.61% -2.74% -6.91% DJIA +0.46% -0.42% 1.67% S&P 500 +0.56% 0.66% 2.89% NASDAQ +1.18% 2.43% -3.07% Rec'd # Security In At Now Change 1/2/97 153 Chevron 65.00 65.00 0.00% 1/2/97 120 3M 83.00 82.13 -1.05% 1/2/97 179 Gen. Motor 55.75 54.00 -3.14% 1/2/97 479 AT&T 41.75 34.75 -16.77% Rec'd # Security In At Value Change 1/2/97 153 Chevron 9945.00 9945.00 $0.00 1/2/97 120 3M 9960.00 9855.00 -$105.00 1/2/97 179 Gen. Motor 9979.25 9666.00 -$313.25 1/2/97 479 AT&T 19998.25 16645.25 -$3353.00 CASH $431.29 TOTAL $46542.54

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